Rep. Michael McCaul: Cut foreign aid to China and other nations holding large amounts of U.S. debt

If other nations are making money from financing American national debt, they shouldn’t be receiving foreign aid, too, Rep. Michael McCaul says.

McCaul has introduced the “Prioritizing Debt Reduction in U.S. Foreign Assistance Act” to limit foreign assistance to any country that holds more than $500 billion in U.S. Treasury Securities.

China holds $1.2 trillion in U.S. Treasuries. Between 2001 and 2011, the U.S. gave China $310 million in foreign assistance, mostly for economic development. The federal debt will likely reach $17 trillion this summer.

“It is hard to understand why the United States would borrow money from a county only to return it in the form of foreign assistance. A better use of such dollars would be paying down debt owed to the crediting country in the first place,” said McCaul.

Only 6 percent of our national debt was held by foreign entities in 1970, but by 2012, foreign holdings amounted to 48 percent of America’s $16 trillion debt.

With the exception of humanitarian and emergency aid, this bill would cut off funding to foreign countries and redirect the finances towards reducing American debt.

McCaul said he wasn’t targeting any nation, although China would be hardest hit by his proposal.

“This is not just about aid to China; this is about modest, commonsense reforms to U.S. foreign assistance. Republicans and Democrats alike often say that debt reduction and spending reform requires tough choices. I believe this should be one of the easiest choices we make as leaders.”